ITO 16(1)(4), MUMBAI V. GHEVARCHAND G. JAIN, MUMBAI

ITA 6688/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3201 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer
• Section: 50C

Judgement Text

1 ITA NO.6688 /MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) ITA NO.6688/MUM/2014 (ASSESSMENT YEAR : 2010-11) ITO 16(1)(4), MUMBAI VS SHRI GHEVARCHND G JAIN 8-E, ROOM NO.74, GR FLOOR, SONAWALA BUILDING, TARDEO ROAD, MUMBAI 34 PAN :AEYPJ7012B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A RAMACHANDRAN RESPONDENT BY SHRI S.L. JAIN DATE OF HEARING : 01-06-2016 DATE OF PRONOUNCEMENT : 15-06-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) [HEREINAFTER C ALLED LD.CIT(A)] DT 19-08- 2014 PASSED AGAINST THE PENALTY ORDER U/S 271(1)(C) DATED 29 TH JULY, 2013 FOR A.Y. 2010-11 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE PENALTY U/S271( 1)(C) OF THE INCOME 2 ITA NO.6688 /MUM/2014 TAX ACT OF RS.11,38,909/ WITHOUT APPRECIATING THE FACTS THAT BY NOT ADOPTING THE SALES CONSIDERATION AS PER STATUTORY P ROVISIONS ULS.50C OF THE I. T. ACT, THE ASSESSEE HAS FURNISHED INACCU RATE PARTICULARS OF CAPITAL GAIN BY DECLARING SHORT TERM LOSS OF RS.3, 12,8201 WHEREAS AS PER DVO REPORT, CAPITAL GAIN WAS ASSESSED AT RS.39, 13,382/- BY THE A.O. THIS WAS CLEAR CASE OF CONCEALMENT OF INCOME A ND FURNISHING INACCURATE' PARTICULARS OF INCOME. THE ASSESSEE HAD ACCEPTED THE ASSESSING OFFICER'S DECISION IN QUANTUM APPEAL AND NO APPEAL WAS FILED AGAINST SUCH ORDER. ' 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WHET HER CIT(A) HAS RIGHTLY DELETED THE PENALTY OF RS.11,38,909 ON THE GROUND THAT ADDITION MADE UPON THE INCOME RETURNED UNDER THE HEAD CAPITAL GAIN ON ACCOUNT OF ENHANCEMENT OF SALES CONSIDERATION BECAUSE OF APPLICATION OF DE EMING PROVISIONS OF SECTION 50C DID NOT LEAD TO CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME. 3. DURING THE COURSE OF HEARING, IT WAS SUBMITTED B Y THE LD.DR THAT IMPUGNED TRANSACTION OF SALE OF FLAT WAS NOT DISCLO SED BY THE ASSESSEE IN ITS RETURN OF INCOME AND THAT ADDITION MADE BY THE ASSE SSING OFFICER U/S 50C WAS ACCEPTED BY THE ASSESSEE AND NO QUANTUM APPEAL WAS FILED, AND THEREFORE, PENALTY WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER AND WRONGLY DELETED BY THE LD.CIT(A). 4. PER CONTRA, IT WAS SUBMITTED BY THE LD.COUNSEL O F THE ASSESSEE THAT IT HAS BEEN WRONGLY MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT TRANSACTION OF SALE OF FLAT WAS NOT DISCLOSED BY TH E ASSESSEE IN THE RETURN. IT WAS SUBMITTED THAT THE SAID TRANSACTION GAVE RISE T O SHORT TERM CAPITAL LOSS AND THE SAME HAS BEEN DULY DISCLOSED IN THE RETURN OF I NCOME. IT WAS FURTHER SUBMITTED BY HIM THAT ADDITION TO THE SALES CONSIDE RATION WAS MADE BY 3 ITA NO.6688 /MUM/2014 APPLYING THE PROVISIONS OF SECTION 50C AND INCOME A SSESSED ON DEEMED BASIS CANNOT BE SAID TO BE INCOME CONCEALED BY THE ASSESS EE AND, THEREFORE, NO PENALTY COULD HAVE BEEN LEVIED. IN SUPPORT OF THIS PROPOSITION HE PLACED RELIANCE ON THE FOLLOWING JUDGMENTS: 1.322 TAXMAN 481 (BOM) CIT VS. FORTUNE HOTELS AND ESTATES PVT. LTD 2. ITA NO. 2210/MUM/2010 RENU HINGORANI VS. ACIT 3. 260 CTR 75 (CAL.) CIT VS. MADAN THEATRES LTD - 4. 33 CCH 647 (AHD) CHIMANLAL MANIAL PATEL VS. ACIT - 5. 38 TAXMAN.COM 47 (ALLAHABAD) CIT VS. DEEWAN TOU RISM LTD 5. WE HAVE GONE THROUGH THE FACTS OF THIS CASE. ON THE BASIS OF ORDERS PASSED BY THE LOWER AUTHORITIES AND EVIDENCES BROUG HT BEFORE US, IT IS NOTED BY US THAT THE ASSESSEE HAD DISCLOSED IN ITS RETURN SH ORT TERM CAPITAL LOSS OF RS.3,12,820 ON SALE OF FLAT NOS 103-104 AT TARDEO ( IMPUGNED FLATS) AND THIS AMOUNT WAS COMPUTED AS PER THE DETAILS GIVEN IN THE COMPUTATION SHEET AS UNDER: SALE PRICE RS. 46,00,000 COST PRICE RS. 49,12,820 SHORT TERM CAPITAL LOSS RS.3,12,820 IT IS FURTHER NOTICED BY US THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FURNISHED COMPLETE DETAILS INCLUDING T HE SALE DEEDS, ETC. ON THE BASIS OF WHICH THE ASSESSING OFFICER PROCEEDED TO M AKE ADDITION U/S 50C. THUS, ALLEGATION OF THE LD.DR THAT THIS TRANSACTION WAS N OT DISCLOSED BY THE ASSESSEE IS FACTUALLY INCORRECT ON THE FACE OF IT AND WAS MADE SIMPLY TO MISLEAD THE BENCH THAT TOO WITHOUT MAKING PROPER VERIFICATION OF THE RECORDS. 4 ITA NO.6688 /MUM/2014 6. NOW COMING TO THE MERITS OF THE ADDITION THE FAC TS ARE CLEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER REFERRED THE MATTER TO THE VALUATION OFFICER FOR VALUING THE FAIR MARKET V ALUE OF THE PROPERTY AS ON THE DATE OF SALE, I.E. 27-07-2009. THE VALUATION WAS M ADE AT RS.83,13,982. ACCORDINGLY, THE ASSESSING OFFICER ADOPTED THE SALE VALUE U/S 50C AT RS.83,13,982 AS AGAINST ACTUAL SALE CONSIDERATION D ISCLOSED BY THE ASSESSEE. ACCORDINGLY, THE CAPITAL GIN WAS RECOMPUTED BY THE ASSESSING OFFICER TAKING THE SALE CONSIDERATION AS VALUED BY THE VALUATION OFFIC ER. THUS, IT IS A CASE WHERE INCOME HAS BEEN COMPUTED ON DEEMED OR ESTIMATE BASI S BY APPLYING THE DEEMING PROVISIONS OF SECTION 50C. IT HAS BEEN HE LD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS FORTUNE HOTELS & ESTATES PVT LTD (SUPRA) THAT IF THE INCOME HAS BEEN RETURNED BY THE ASSESSEE ON THE BAS IS OF SALE VALUE MENTIONED IN THE SALE DEED, THEN, IF DIFFERENT VALUE HAS BEEN DETERMINED BY THE AUTHORITY, THAT BY ITSELF, WOULD NOT MEAN THAT ASSESSEE HAD CO NCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVY OF PENALTY WAS HELD TO BE UNJUSTIFIED, UNDER SUCH CIRCUMSTANCES. SIMILAR VIE W HAS BEEN TAKEN BY CO- ORDINATE BENCH IN THE CASE OF RENU HINGORANI (SUPRA) . RELEVANT OBSERVATIONS FROM THE JUDGMENT ARE REPRODUCED BELOW: 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. WE FIND THAT THE AO HAD MADE ADDITION OF RS.9,OO,82 4/- BEING DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SA LE AGREEMENT AND THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY . THUS, THE ADDITION HAS BEEN MADE BY THE AO BY APPLYING THE PR OVISIONS OF SECTION 50C OF THE ACT. IT IS EVIDENT FROM THE ASSE SSMENT ORDER THAT THE AO HAS NOT QUESTIONED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE BUT THE ADDITION IS MADE PURELY ON THE BAS IS OF DEEMING PROVISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDING THAT THE ACTUAL SALE CONSIDERATION IS MORE THAN THE SALE CONSIDERATION ADMITTED AND MENTIONED IN THE SALE AG REEMENT. THUS IT 5 ITA NO.6688 /MUM/2014 DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF T HE REVENUE THAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FUR NISHED ALL THE RELEVANT FACTS, DOCUMENTS/MATERIAL INCLUDING THE SA LE AGREEMENT AND THE AO HAS NOT DOUBTED THE GENUINENESS AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDER ATION RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCE S, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT FURNISHED CORRECT PA RTICULARS OF INCOME. MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION ON THE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTHORITY WOU LD NOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THIS AGREEMENT WAS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION B ECAUSE OF THE DEEMING PROVISIONS DOES NOT IPSO FACTO ATTRACT THE PENALTY U/S 271 (1 )(C ). HENCE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VIS RELIANCE PETROPRODUCTS PVT.LTD (SUPRA), THE PENALTY LEVIED U/S 271 (1)( C) IS NOT SUSTAINABLE. THE SAME IS DELETED. 7. SIMILARLY, HONBLE CALCUTTA HIGH COURT IN THE CA SE OF CIT VS MADAN THEATRES LTD 260 CTR 75 TOOK THE SIMILAR VIEW BY HOLDING THAT WHERE THE SA LE CONSIDERATION WAS TAKEN ON DEEMED BASIS AND REVENU E DID NOT PRODUCE ANY IOTA OF EVIDENCE THAT ASSESSEE ACTUALLY RECEIVED O NE PAISE MORE THAN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM THEN IT W AS NOT FIT CASE FOR LEVY OF PENALTY BECAUSE IT WAS ON ACCOUNT OF DEEMING PROVIS IONS OF SECTION 50C IN WHICH THE ASSESSING OFFICER HAD MADE THE ADDITION B Y ADOPTING SALE CONSIDERATION BEING THE VALUE ADOPTED FOR STAMP VAL UATION. UNDER THESE CIRCUMSTANCES, NO CASE IS MADE OUT BY THE ASSESSING OFFICER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 8. THUS, TAKING INTO ACCOUNT FACTS AND CIRCUMSTANCE S OF THE CASE AND CLEAR LEGAL POSITION AS DISCUSSED ABOVE, WE FIND THAT LEV Y OF PENALTY WAS NOT JUSTIFIED IN THIS CASE, AND THEREFORE, THE LD.CIT(A) HAS RIGH TLY DELETED THE SAME AND 6 ITA NO.6688 /MUM/2014 THEREFORE, NO INTERFERENCE IS CALLED FOR THEREIN AN D THEREFORE, GROUND RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS 15 TH DAY OF JUNE, 2016. SD/- SD/- (AMIT SHUKLA) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH JUNE, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , G-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES